Biotech firm lands big investor

Regulus Therapeutics allies with Sanofi-Aventis

Carlsbad biotech Regulus Therapeutics Tuesday landed an investment of at least $35 million for drug discovery and development from French pharmaceutical giant Sanofi-Aventis, with the initial work targeting fibrosis.

The development alliance has a potential value of $750 million if certain milestones are met, making it the largest partnership in Regulus’ biotechnology specialty, known as microRNA.

The Sanofi-Aventis investment is unusual because Regulus is a young company, founded in 2007. It has a lot of work remaining before it’s ready to push a drug candidate into the extensive medical trials required by federal regulators.

“Generally, Big Pharma will pay a significant upfront amount when they see the drug getting to clinical trials in Phase 1 or Phase 2,” said Simos Simeonidis, senior biotech analyst for Rodman & Renshaw. “With this deal, they did $35 million upfront, and they haven’t even selected a target they’re going to go after. So it’s really very early stage.”

In a conference call with analysts, Regulus Chief Executive Kleanthis Xanthopoulos said the lead disease target will be fibrosis, a tissue disorder. Xanthopoulos did not specifically say what kind of fibrosis, such as pulmonary or cystic, that the research would focus on, and he indicated there were other disease possibilities in the pipeline.

Regulus, which has 45 employees, was founded by Isis Pharmaceuticals of Carlsbad and Alnylam Pharmaceuticals of Cambridge, Mass. The companies each put about $20 million into Regulus, then stocked its staff and board with some of the leading experts in the microRNA field, Simeonidis said.

“It’s a pretty high level and high quality group, and that’s recognized by the pharmaceutical industry and measured by the (investment) this company is able to bring in,” he said.

This is the third partnership for Regulus with a big pharmaceutical company. Last year, it signed a deal with GlaxoSmithKline for $20 million initially and up to $600 million if future milestone are met. The two companies will collaborate on developing drugs for inflammatory diseases.

Then in February, GlaxoSmithKline entered into a separate alliance for up to $150 million to find drugs to treat hepatitis C.

MicroRNA, tiny strands of genetic material critical in the production of proteins, weren’t discovered until relatively recently. They are important because they can influence an entire network of genes. With diseases, they don’t act normally. So by targeting these RNA strands with drugs, biotech researchers may be onto a new way to treat certain ailments.

“This is a whole new frontier for pharmaceutical research, where an entire pathway of human disease can be targeted, not just a single disease,” John Maraganore, chief executive of Alnylam, said in a conference call with analysts.

The deal includes $25 million in upfront fees, plus a pledge for an additional $10 million in future equity investment by Sanofi-Aventis. It also includes annual research support for three years, with an option to extend the deal for two more years.

Regulus also granted Sanofi-Aventis an option to extend the partnership to other diseases beside fibrosis. If exercised, the option would mean an additional $50 million to Regulus.

Isis and Alnylam each will receive 7.5 percent of the Sanofi-Aventis investment to pay back some of the initial capital they put into Regulus. But the rest will be available to the company for drug development.

“Funding Regulus with the best cost of capital — namely a partnership with pharma — allows Regulus to have the needed resources, while Alnylam and Isis maintain the highest possible level of ownership,” Maraganore said.